Executives at UnitedHealth Group Inc. (NYSE:UNH) seem to be assuming that their company will be participating in a relatively small number of health insurance exchanges in 2014, and that exchange business will have little effect on earnings that year.
The executives talked about UnitedHealth’s views on the Patient Protection and Affordable Care Act exchange program and other topics, such as the effects of proposed federal funding cuts on the company’s Medicare Advantage plan program, today during a conference call.
UnitedHealth held the conference call to review its first-quarter earnings. The company is reporting $1.2 billion in net income for the quarter on $30 billion in revenue, compared with $1.4 billion in net income on $27 billion in revenue for the first quarter of 2012.
Since the U.S. economy slumped in 2008, health insurers have often reported facing shrinking employer plan and overall commercial plan enrollment as a result of layoffs.
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UnitedHealth ended the first quarter providing or administering health coverage for a total of 42 million people, compared with 36 million people a year earlier. Commercial plan enrollment grew 3.2 percent, to about 27 million.
The drop in net earnings was due mainly to the fact that the company had benefited from unusually low claims and revenue from an unusual gain in the first quarter of 2012, executives said.
PPACA requires the U.S. Department of Health and Human Services (HHS) to work with state regulators to provide exchanges, or health insurance supermarkets, for residents of all 50 states and the District of Columbia by Oct. 1, with the coverage starting to take effect Oct. 1.
In January, during UnitedHealth’s earnings call for the fourth quarter of 2012, Stephen Hemsley, the president suggested that the company could end up participating in 10 to 25 exchanges.
During the latest call, Hemsley made no predictions about the number of exchanges UnitedHealth will use to distribute its products.
“We will be very selective in where we participate and do not believe the exchanges will be a significant factor for us in our 2014 commercial market outlook,” Hemsley said.